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Industry Canada to limit telecom’s spectrums

Ottawa has announced measures it says will foster competition, improve service and lower prices in Canada’s cellphone market.

Industry Minister Christian Paradis on Thursday said the final rules for the government’s auction of 700-megahertz band radio wave spectrum to begin Nov. 19 will ensure that each region of the country has at least four wireless providers.

Industry Minister Christian Paradis says that by limiting what telecoms can buy, the government is giving Canadians more choice. (Sean Kilpatrick / THE CANADIAN PRESS)

The industry department released documents showing major incumbents will be limited to buying one of four blocks of the most coveted spectrum, part of what it called a renewed effort to promote competition.

But Iain Grant, managing director of telecommunications consulting firm the SeaBoard Group, said Ottawa could have done more to make spectrum licenses available exclusively to smaller players given the dominance of Rogers Wireless, Bell Mobility and Telus Mobility in Canada’s $19 billion wireless market.

Public Mobile, formed after the government’s previous auction of spectrum in 2008, applauded the government’s commitment to increase competition in the wireless sector. CEO Alek Krstajic particularly welcomed its promise to make more spectrum available in the near future.

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Ottawa says the auction is expected to raise at least $897 million based on the value of the minimum opening bids. The 2008 spectrum license auction generated $4.25 billion after more than 31 rounds of bidding.

Paradis said the new spectrum is needed to accommodate spiraling consumer and business demand for bandwidth intensive services such as video downloads and will provide cellular device users with faster, stronger and lower cost connections.

Along with a previously unveiled easing of foreign ownership restrictions, he said the auction will encourage competition in the wireless industry and lower consumer prices, which he said have declined since the last auction.

Ottawa at that time reserved spectrum for new entrants and companies including Mobilicity, Wind Mobile and Public Mobile emerged to offer lower rate plans that spurred price cuts by incumbent operators.

Many observers, however, say the pending auction will be dominated by the major players who have the free cash to participate. Desjardins Securities analyst Maher Yaghi said in a note to investors that each of the incumbents will spend about $600 million on spectrum purchases.

Grant said the scenario is behind Ottawa’s move Thursday to reinforce regulations requiring major players to share their cellular transmission towers with smaller rivals. The industry minister also said Ottawa will expand and extend the requirement for companies to provide seamless roaming to competitors outside of so-called domestic home zones.

“No Canadian should be left stranded simply because he or she is outside the range of the chosen service provider,” Paradis said in a statement.

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He said Ottawa will also review its policy on spectrum licence transfer requests ahead of the November auction in the context of a broad consultation with industry participants.

“The intent is to make sure that spectrum is not hogged by a few players and to keep competition alive in the sector,” Yaghi wrote.

Grant said Ottawa is acknowledging that its attempts to promote cell tower sharing and seamless roaming have not been fully effective.

He adding that consumer complaints about service issues such as dropped calls and new entrants’ claims that they face barriers in accessing competitors’ networks provide the Harper government with new impetus to enforce the rules.

“Ottawa has a very big stick in that it controls the issuance of operating licenses,” Grant noted.

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